If I had to summarize our plight, I would plot it thusly: The fourway
intersection of a long financial cycle's nadir, a rising peak of geopolitical instability
and the depletions of fossil fuels and other non-cyclical resources: sealife, soil, water,
species, rain forests, etc.

Many of you are familiar with "long-wave" cycle analysis; one insightful financial cycle was
identified by the Russian economist Kondratieff. Here is a depiction of the cycle,
which maps a 60-70 year long cycle of credit expansion and contraction:

Depletions are not cyclical. Stuff which gets used up/killed off doesn't regenerate.
Petroleum is in a depletion end-game depicted here in the classic Hubbert's Peak:

A number of other things don't regenerate, at least not within human lifespans or perhaps
ever: ground water, rain forests (a monoculture tree farm is not a rain forest), species
which are ground down to extinction, even soil. There is a continent-sized area of
floating plastic in the North Pacific which will not disappear for a long time
because plastic degrades very slowly. We can assume the area is only growing in size
and density of waste.

A preponderence of evidence suggest that much of the financially valuable
sealife on Earth is in essentially terminal decline due to overfishing and habitat
destruction. If a few wild tuna survive, we cannot say the species is extinct, but as
a "harvestable commodity" tuna will be depleted.

Uranium and other metals will contiue to exist, but not in financially viable concentrations.
The energy required to extract them will exceed their value. At some point this may well
be true of oil. It's still there in small pockets, but it takes more energy to extract it
than it contains.

Geopolitically, two powerful long-term constraints on ethnic, tribal and regional
conflict have dissolved: post-colonialism and the Cold War. Colonialism is simply
a modern term for conquering or extending control ("Hegemony") over other lands.

When Tibet expanded into
China in 763 A.D., it was imperialistic and colonial; when China conquered
Vietnam around 1000 A.D., it too was imperialistic and colonial. When Islam conquered
Spain, it was imperialistic and colonial; the point is simply that Western expansion is
not a Western invention, and inventing a new word does not make "hegemony" or conquering
other lands a new phenomenon.

Trick question note: Many Chinese become visibly upset when it is said that
Tibet is not part of China. If you are ever in such a debate, just ask the Chinese person:
"then shall we go back to the borders of 763?" He or she will undoubtedly agree, confident
that China always ruled Tibet; then you can say, "Excellent. Tibet controlled Xian,
capital of China in 763, and all the land from Lhasa to Xian." It is a historical fact
that will give them a new perspective on the plasticity of borders and the fluidity
over history of just who ruled whom.

Colonial empires rather naturally tend to suppress ethnic and regional conflicts (not
to mention rebellions and uprisings) as bad for business, and so colonies must simmer
in seething resentment for decades or even centuries. Once the colonial overlords
have been overthrown/evicted, the first breath of glorious freedom is quickly followed
by the renewal of old hatreds, blood feuds and ethnic/religious strife.

The arbitrary order imposed on Africa, the Mideast and Africa by the British Empire and
wannabe Western imperialistic powers in the 19th and early 20th centuries has fragmented
along much older ethnic, tribal and religious lines.

Just as the colonial hegemonies were overthrown after World War II, launching the
post-colonial era, the Cold War between the USSR and the USA arose to impose a new
series of alliances and hegemonies over virtually all nation-states.

The Cold War was actively hot for decades: the Korean War, the Berlin Wall and airlift,
the Cuban Missile Crisis, Vietnam, the Prague Spring uprising in 1968, Afganistan in 1989,
etc. Nonetheless, in 1972 the Cold War powers
agreed for the first time to limit their nuclear arsenals in the SALT Treaty
(Strategic Arms Limitation Treaty Agreement), and the Cold War reached a relatively stable
configuration of proxy wars and jockeying for influence.

With the collapse of the Soviet Union in 1991, these Cold War constraints were lifted, and former
Soviet colonies broke free. Now the full bloom of malignant conflicts has been free
to flower globally, and dozens of hot conflicts are underway on every continent.

Against this sobering intersection of financial contraction, geopolitical instability
and resource depletion stands a belief in the transformative power of technology.
History seems to support the optimistic notion that energy densities and per capita
consumption can keep rising basically forever, as humanity has moved from human power
to harnessing animal power and then sail and water power, and moved from burning wood to
coal to oil in a movement up to ever-denser energy densities.

For an example of this sort of thinking, let's turn to a recent interview with Silicon
Valley venture capitalist Vinod Khosla, who is justifiably renowned for his foresight
and investing acumen. In this interview, he predicts $1/gallon biofuels will make oil
and gasoline uncompetitive; who bother with oil when biofuel is so much cheaper?

I have no question that in 10 years, there's no way oil will be able to compete with
biofuels. Even in five years. Now it will take a long time to scale biofuels, but I'm
the only one in the world forecasting oil dropping in price to $35 a barrel by 2030.
I'll put it on the record: Oil will not be able to compete with cellulosic biofuels.

According to Department of Energy Quick Oil Facts,
the US consumes about 390 million gallons of gasoline per day. At 28 gallons of
gasoline/barrel of crude that amounts to 13 million barrels of crude oil equivalent--
about 65% of the crude oil consumed by the USA (21 million barrels a day).

So even if wind, solar, geothermal, nuclear, tidal, etc. was generating all the nation's
electrical power, our current lifestyle would require about 450 million gallons of
gasoline or equivalent per day.

(Recall that biofuels only provide at best 85% of the energy density
of gasoline, hence you need 115 gallons of biofuel to generate the same energy in 100
gallons of gasoline/petrol.)

And what if these enormous
new industries actually require more energy than the current petroleum complex to
operate? Then perhaps we'll need 500 million gallons of gasoline equivalent liquid fuels
because the harvesting, cooking, distilling, refining and transporting of biofuels requires
more energy than pumping, cracking and transporting petroleum products.

Away from the glow of wishful thinking, it seems there are a couple of serious
problems with biofuels:
1. it requires turning over the entire U.S. arable cropland from growing food to
switchgrass or what-have-you for ethanol
2. the process requires so much energy it is net-negative, i.e. requires more energy
than it produces.

The studies do find some benefit from biofuels but only when planted on agricultural
land too dry or degraded for food production or significant tree or plant growth and only
when derived from native plants, such as a mix of prairie grasses in the U.S. Midwest.
Or such fuels can be made from waste: corn stalks, leftover wood from timber production
or even city garbage.

But that will not slake a significant portion of the growing thirst for transportation
fuels. "If we convert every corn kernel grown today in the U.S. to ethanol we offset just
12 percent of our gasoline use," notes ecologist Jason Hill of the University of Minnesota.
"The real benefit to these advanced biofuels may not be in displacement of fossil fuels
but in the building up of carbon stores in the soil."

Here is the academic paper which blew the doors right off the fantasy that biofuels
could replace fossil fuels in some sort of seamless transition that left all 220 million
vehicles in the U.S. purring along on billions of gallons of biofuels.

Energy outputs from ethanol produced using corn, switchgrass, and wood biomass were each
less than the respective fossil energy inputs. The same was true for producing biodiesel using
soybeans and sunflower, however, the energy cost for producing soybean biodiesel was
only slightly negative compared with ethanol production.

Findings in terms of energy outputs
compared with the energy inputs were:
• Ethanol production using corn grain required 29%
more fossil energy than the ethanol fuel produced.
• Ethanol production using switchgrass
required 50% more fossil energy than the ethanol fuel produced.
• Ethanol production using
wood biomass required 57% more fossil energy than the ethanol fuel produced.
• Biodiesel
production using soybean required 27% more fossil energy than the biodiesel fuel produced
(Note, the energy yield from soy oil per hectare is far lower than the ethanol yield
from corn).
• Biodiesel production using sunflower required 118% more fossil energy than the
biodiesel fuel produced.

Consider the consequences of these points from the report:

About 50% of the cost of producing ethanol
(42c/ per l) in a large-production plant is for the corn
feedstock itself (28c//l) (Table 2). The next largest input
is for steam (Table 2).

Clearly, without the more than $3 billion of federal
and state government subsidies each year, U.S.
ethanol production would be reduced or cease, confirming
the basic fact that ethanol production is uneconomical
(National Center for Policy Analysis, 2002).

If the
production costs of producing a liter of ethanol were
added to the tax subsidies, then the total cost for a
liter of ethanol would be $1.24. Because of the relatively
low energy content of ethanol, 1.6 l of ethanol
have the energy equivalent of 1 l of gasoline. Thus, the
cost of producing an equivalent amount of ethanol to
equal a liter of gasoline is $1.88 ($7.12 per gallon of
gasoline), while the current cost of producing a liter
of gasoline is 33c/ (USBC, 2003).

Therefore, even using Shapouri’s optimistic data, to
feed one automobile with ethanol, substituting only
one third of the gasoline used per year, Americans
would require more cropland than they need to feed
themselves!

The
cost per ton of switchgrass pellets ranges from $94
to $130 (Samson, Duxbury, and Mulkins, 2004). This
seems to be an excellent price per ton.

However, converting switchgrass into ethanol results
in a negative energy return (Table 4). The negative
energy return is 50% or slightly higher than the
negative energy return for corn ethanol production
(Tables 2 and 4).

The cost of producing a liter of
ethanol using switchgrass was 54c/ or 9c/ higher than
the 45c/ per l for corn ethanol production (Tables 2 and
4). The two major energy inputs for switchgrass conversion
into ethanol were steam and electricity production
(Table 4).

Now perhaps it could be argued that if the U.S. scaled up alternative sources for
electricity to some nearly unimaginable height, then the excess power could be
converted to steam to cook and process 500 million gallons of liquid fuel a day.

But exactly what are the cost and resource inputs for this stupendous amount of energy? Thermonuclear
power? Nice, but that is science fiction at the moment, not science.

Given the evidence before us, it seems completely improbable that the U.S.
can produce billions of gallons of biofuels without burning stupendous quantities of
imported petroleum to do so.

The cycles and the end-games are intersecting, and technological fantasies are not
actually addressing the problems at hand. Energy densities will have to drop significantly,
and net energy production must rise significantly (energy produced minus fossil fuels required to
harvest, mine, process and transport the alternative fuel). There is precious little
evidence that biofuels can be produced in such massive quantities without using
equivalently massive quantities of fossil fuels.

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